Britain Shows a Deficit Of $5.2 ‘Million in Month

Britain lost ground in January in the battle to earn trade surplus, selling $5.2‐million less abroad than she bought. The deficit contrasted to a surplus in December.

The Department of Trade and Industry, which announced the figures today, said that both imports and exports had fallen since December, but that exports had declined by a larger amount, to what the department called erratically low levels.

At the same time, the Treasury looked at some leading economic indicators and found they pointed upward, but apparently not sharply enough to hope that Britain's most urgent economic problem, persistent unemployment, will be solved quickly. More than one million were unemployed last month.

Because trade in invisible exports such as financial, shipping and insurance services still is in substantial surplus, the balance of trade deficit last month poses no international payments problems for Britain. The $5.2‐million trade deficit is more than offset by an estimated surplus of $150‐million in the balance on invisibles.

The January trade figures, however, show a contrast to those for December and represent a sharp reversal of the country's position. In December the trade surplus was $93.6million, closing out a year in which the nation achieved 12‐month surplus of $767‐million. In fact, 1971 was one of Britain's best years in regard to trade surplus and there was much optimism here when the yearend figures were announced Jan. 13.

Spokesmen ror the Trade and Industry Department cited only one possible cause for the reversal, a decline of shipments of precious stones to sterling area countries. They noted that such shipments were subject to wide vacillation.

They also said the contrast between January and December to make up for delays of shipments of British goods caused by the Bast coast dock strike in the United States.

The figures for the two months are:

Experts Impala balance

Doc. 2,055451000 1,961000 9300,000

(Surplus)

Jan. 1 929,200,000 1,911,400,NO 5,700,000

(Dolicit)

The Treasury's monthly analysis of the economic situation reported the following:

¶Personal spending up 3½ per cent in the second half of 1971 as compared with the first half;

¶Fourth‐quarter increases of 16 per cent in private‐sector housing starts and 6¼ per cent In completions over the third quarter;

¶A small increase of ½ of 1 per cent in industrial production from the first to the second half;

¶A sharp upturn in'business optimism, as recorded hi the Confederation of British Industry's February industrial trends survey. The survey showed expectations among businessmen that production would rise in the next few months along with investment in new plant and machinery and the value of new orders, but that manufacturing employment would remain at present levels.

Public discussion is increasing here as economists and government, business and labor leaders seek to explain the apparent paradox of growing unemployment at a time of quickening business activity. Many are suggesting that Britain may be beginning to feel the effects of automation and a high level of productivity per man‐hour, indicating that many of those now losing their jobs may not be rehired as economic activity increases.

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A version of this archives appears in print on February 12, 1972, on Page 37 of the New York edition with the headline: Britain Shows a Deficit Of $5.2 ‘Million in Month. Order Reprints|Today's Paper|Subscribe